The impact of private equity funds and US capital markets’ financing
The 2nd session of the Tradewinds Shipowners Forum which was opened by Militiadis Varvitsiotis, Minister of Shipping, Maritime Affairs and the Aegean, debated the impact of private equity funds and US capital markets’ financing of the Greek newbuildings programme.
The panel included major shipowners, including George Economou, Chairman of the Board, President & CEO Dryships Inc; Angeliki Frangou, CEO & President, Navios Maritime Holding; Emanuele A. Lauro, Chairman & Chief Executive Officer, Scorpio Bulkers; Evangelos M. Marinakis, Director & Chairman of the Board, Capital Product Partners; thanasios J. Martinos, Managing Director, Eastern Mediterranean Maritime Limited; Nikolas Tsakos, President & CEO, Tsakos Energy Navigation.
In front of a packed convention centre at Posidonia Exhibition, the panel discussed the funding sources of the Greek newbuilding programme order book which last year alone committed upwards of $13bn for 275 vessels of more than 24.5m dw and increasing the dwt total on order for Greeks by 364%. The panelists also debated the pros and cons of going public or staying private.
Arguing his case on behalf of the privately held shipping companies, Martinos said: “We feel the competition growing stronger as a result of access to liquidity from the markets or PE funds, but on the other hand we welcome investment activity because it is beneficial to the overall industry and the economy at large as this gives business to ship yards, creates innovation, reduces transportation cost to the benefit of consumers, fuels vertical sectors such as consultants and contributes to cleaner seas.
“It is also true that the listed space offers you opportunities to manage generational change“, he added.
There is an apparent trend for Greek shipping going public in the future. The sector will be less private and more public which is better for everyone as the Greeks can offer the world shipping expertise and knowledge“, he added.
Regarding the potential tonnage oversupply that growth funding may create, Martinos said that investors could be directed to the second hand market to avoid oversupply of tonnage.
On his part, Marinakis said that private equity investments have to be dealt with professionally and that the companies who operate this tonnage should not be doing so for speculation purposes but should adopt a more measured and realistic approach to their returns.
Tsakos, whose Tsakos Energy Navigation is one of the first shipping companies to go public said: “We look at this as a way to grow our business. We maintain a large shareholder base and we had to go through a lot of teething problems but we are satisfied with the results and we will continue forward. Going public offers you more opportunity to win the game. On the private side you are restricted“.
Frangou agrees: “It is important for generational change and because we are in a capital intensive business having access to capital is the only way to expand your fleet. There are clear advantages if you can also achieve economies of scale.
In opening the forum, Miltiadis Varvitsiotis said: “We want to engage our shipping industry with our national economy and we will introduce new measures to encourage the arrival of more shipping companies to Greece without harming the competitiveness of Greek shipping. We also want to prevent the introduction of any regional measures and we want to reinforce collaboration with the IMO.
“We want to facilitate more companies and people to go to sea either as entrepreneurs, seafarer or service providers and we will assist both existing and new companies through the structural funds designed to regenerate our growth policy for the first time in shipping“.
Source: Posidonia Events
